Canberra Airport - Rego ACT - ACT Government

2. Should There Be A Cap On The Number Of Taxi Licences
Canberra Airport agrees with the basic proposition of the OECD Report that the removal of
the cap on the issuing of licences improves consumer welfare and that the restriction on
competition is unjustified and results in less than an optimal result for consumers. This can
be seen now in Canberra, where consumer satisfaction with taxi services has substantially
declined with little incentive on the taxi industry to address those concerns due to the closed
nature of the market. Indeed the simple reality is that the taxi industry is in complete denial
about the extent of the problems and through self interest opposes the very measure that will
fix the problem – more taxis on the road.
Recommendation 66 of the Commonwealth Government’s Henry Tax Review states that the
quantity limits on taxi licences should be phased out. The report notes that the restrictions on
licences “are beyond those necessary to maintain service standards or safety and are simply
used to raise revenue.” The Review notes that in terms of dealing with the transitional
problem for existing owners, other than conducting a buy back, the price for licences (i.e the
capital sum or the annual licence fee) could be reduced incrementally over time.
The reality is that the taxi industry does operate in many cities in the world without a cap on
licences and does so without compromising safety or quality of service standards – indeed the
quality of service is substantially improved. In particular Canberra should look to the national
capital of New Zealand, Wellington, as being a similar size city with a similar culture and
value system in nature which successfully operates with a completely deregulated and
uncapped taxi market.